Sterling weaker after big PMI miss..
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| March's UK PMI reading is not a good one.
There were positives so let's start there as they are the reason why GBP hasn't fallen by much so far in today's trading. Manufacturing beat forecasts and remains similar to last month. The overall figure of 51.0 is still growth (anything above 50 signals growth) and the Euro-Zone's result wasn't very good either.
But, the result of 51 was far less than the expected 52.9 and Feb's 53.7. So what does this mean and why the lower score?
Well the data shows that consumers scaled back spending money in March and the cost to produce in the UK rose to its highest point in three-and-a-half years due to higher energy and shipping costs.
A drop from 53.7 to 51 in one-month is significant and does not bode well for the months ahead for Chancellor Reeves or the BoE, where we will see the real effects of the Iran-US war on economies.
It has been quite the turnaround this month I have to say for the UK.
From interest rate cuts expected to now likely hikes instead. January & February saw really positive economic figures from the UK which created optimism for all and now because of the Iran-US war, we are looking at recession or worse stagflation if things don't improve quickly.
For the Euro-Zone, it's not looking good either..
Manufacturing (mainly out of Germany) was the only strong point in the data with inflation being registered at the fastest pace since Feb 2023 in both the manufacturing and services sector.
Supplier delays have jumped to their highest since mid-2022 and business confidence and new orders have fallen to the same level as when Russia first invaded Ukraine. The overall growth reading was 50.5, down from 51.9 previous and the 51 expected.
Schroders, an asset management firm, have today downgraded their forecast of the Euro and upgraded the USD citing an energy shock to economic growth creating clear divergence between the two. They remain neutral on the Pound.
The news today hurts the Pound more than the Euro near and long-term. Over to the main event tomorrow now with the UK's inflation result for February.
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